Painter Said to Be Focus of FBI Probe

Kim ChristensenTimes Staff Writer

The FBI is investigating allegations that self-styled "Painter of Light" Thomas Kinkade and some of his top executives fraudulently induced investors to open galleries and then ruined them financially, former dealers contacted by federal agents said.

Investigators are focusing on issues raised in civil litigation by at least six former Thomas Kinkade Signature Gallery owners, people who have been contacted by the FBI said.

The ex-owners allege in arbitration claims that, among other things, the artist known for his dreamily luminous landscapes and street scenes used his Christian faith to persuade them to invest in the independently owned stores, which sell only Kinkade's work.

"They really knew how to bait the hook," said one former dealer who spoke on condition of anonymity because of the sensitive nature of the case. "They certainly used the Christian hook."

Kinkade has denied the allegations in the civil litigation.

Two former dealers told the Los Angeles Times that they had been asked to provide documentation of their business relationships with Kinkade's company. They said agents asked for copies of dealer agreements, retail sales policies, training materials from "Thomas Kinkade University" and correspondence, including e-mail.

Kinkade Co. spokesman Jim Bryant said Monday that the Morgan Hill, Calif.-based company was unaware of a criminal investigation and had not been contacted by the FBI or federal prosecutors.

"The Thomas Kinkade Co. asserts that there is no legitimate grounds for a federal investigation of any kind," Bryant wrote by e-mail.

Others familiar with the matter, however, said the FBI's San Jose office, where Wickham is based, was coordinating an investigation in which agents from offices across the country were conducting interviews.

Former gallery owners said that after they had invested tens of thousands of dollars each or more, the company's practices and policies drove them out of business. They alleged they were stuck with unsalable limited-edition prints, forced to open additional stores in saturated markets and undercut by discounters that sold identical artworks at prices they were forbidden to match.

Some also have accused Kinkade -- touted as the most widely collected living U.S. artist -- of scheming to devalue his public company, Media Arts Group Inc., before taking it private two years ago for $32.7 million as Thomas Kinkade Co.

Kinkade grew up in Placerville, Calif., and began his rise to fame in the 1980s, when he and his wife spent their savings to start making his prints.

Since then he has built a lucrative career from the mass marketing of his distinctly romantic, idealized images, with such titles as "Sunset on Lamplight Lane" and "The Garden of Prayer."

Although critics have been less than generous with their praise, and sometimes openly derisive of his work, that has not deterred the multitudes who pay from a few hundred dollars for paper prints to more than $10,000 for canvas editions he has signed and retouched.

Word of an FBI investigation followed company's first major legal setback in dealer litigation. In February, an arbitration panel awarded $860,000 to the former owners of two failed Signature galleries.

The panel ruled that the company and one of its executives, Richard F. Barnett, "failed to disclose material information" that would have dissuaded Karen Hazlewood and Jeffrey Spinello from investing $122,000 to open the first of their two Virginia galleries in 1999.

The arbitrators, in a 2-1 ruling, also found that Kinkade and other company executives used the artist's familiar Christian-oriented themes to create "a certain religious environment designed to instill a special relationship of trust" with the couple, who have since divorced.

"It was a program of lies and deception, predicated on Christian values that weren't there," said Joseph Ejbeh, the Michigan attorney who tried the arbitration case.

Norman Yatooma, whose firm Ejbeh worked for at the time, has said the $860,000 award could total $3.5 million when interest, costs and attorney fees are added.

Bryant, the Kinkade Co. spokesman, said the company was confident that the arbitration ruling would be overturned.